824.6363 ST 2/71: Telegram
The Minister in Bolivia (Norweb) to the Secretary of State
[Received 8:55 p.m.]
12. Referring to my telegram 11, March 15, 9 p.m. I spoke informally with the Foreign Minister this morning and was informed that the Government’s action against the Standard Oil Company is based on findings of the Ministry of Mines and Petroleum that a fraud has been committed in illegally exporting oil to the Argentine Republic in 1925–1926; that, however, the most important [factor in?] the Bolivian Government claim is the evasion of taxes amounting to 1,400,000 bolivianos during the early period of exploitation; and that therefore all the properties of the company pass to the state under the fraud provision (article 18) of the Richmond Levering concession of 1920 taken over by the Standard Oil Company. The question of the evasion of taxes has long been before the Supreme Court but by its action the Government has taken the matter into its own hands. The Foreign Minister added that the company would be operated by the official government petroleum agency and on inquiring why it had been [led] to seize the company’s entire property and business to establish its claim he stated that legally the Government has this power and that, in addition to the legal grounds, there is a moral justification arising from the company’s non-cooperative attitude during the Chaco war adding that it was “a natural aspiration of a country to control its petroleum resources.”
Apparently concerned that the action of the Government might properly be regarded as an attack on foreign capital, the Foreign Minister stated that he had cabled the Bolivian Minister to try to explain to the Department that it is only an internal matter affecting a Bolivian company.
It was plain from his remarks and attitude that the Government is glad to have a pretext to seize the property of the company without necessity of indemnification and irrespective of the relative unimportance of the claim, regards its action as legally justified and well deserved. Before I left he promised me to ask that the company be allowed access to its office and files in order to prepare its defense and I have just been informed that this has been granted.
The company’s lawyers advise delay in appealing to the Supreme Court and have petitioned the Junta to reconsider its resolution hopeful that some compromise may be possible.